The US Federal Maritime Commission (FMC) has concluded an enforcement proceeding against Mediterranean Shipping Company (MSC), imposing civil penalties totalling $22.67 million for multiple violations of the Shipping Act.
The decision followed an investigation and prosecution by the FMC’s Bureau of Enforcement, Investigations, and Compliance through its Offices of Investigation and Enforcement.
The commission’s ruling addressed three categories of violations spanning several years.
According to the FMC, the first violation occurred between 2018 and 2020, when MSC billed customs agents listed as “notify parties” for demurrage and detention charges via the “merchant clause” in its bills of lading, despite those parties having no involvement in moving the cargo. Penalties for these violations amounted to $65 000.
The second violation involved MSC’s failure to include in its published tariff, from 2021 to early 2023, a statement of applicable fees for non-operating reefers (NORs).
The commission upheld the Administrative Law Judge’s (ALJ’s) determination of a violation during this period but modified the finding on wilfulness. It ruled that knowing and wilful violations had begun only after MSC’s March 2022 statement to the commission indicating it would amend its tariff. Penalties here totalled $9 460 000.
The third and largest violation concerned MSC overcharging customers for demurrage and detention fees related to NORs. The commission reversed the ALJ’s conclusion that this stemmed from a mere “billing system” mistake.
Instead, it found the factual record showed overcharging in approximately 23% of all NOR bills throughout 2021. It concluded that “MSC’s billing was not merely the result of a mistake but rather that it constituted an unreasonable practice within the meaning of section 41102(c).”
A penalty of $5 000 per violation was assessed, resulting in $13 145 000 for this conduct.
The penalties assessed against MSC totalled $22.67m. The FMC said it received no revenue from civil penalties, which were paid directly to the General Fund of the US Treasury.
This case forms part of the FMC’s broader enforcement efforts amid heightened scrutiny of carrier billing practices following supply chain disruptions and legislative updates of the Shipping Act.
